The Conduct of Lord Paul - Privileges and Conduct Committee Contents


APPENDIX: REPORT FROM THE SUB-COMMITTEE ON LORDS' CONDUCT


Members' reimbursement scheme: the conduct of Lord Paul

Introduction and summary

1. This report replies to a letter from the Clerk of the Parliaments dated 5 March 2010 which, following the Report from the Committee for Privileges on the procedure for considering complaints against members[5] ("the report on procedure"), invited the Sub-Committee on Lords' Interests[6] to help him investigate a complaint about Lord Paul's use of the members' reimbursement scheme.

2. We find on the facts that the Oxfordshire property designated by Lord Paul as his main residence for the purpose of the members' reimbursement scheme from 11 October 2005 to the end of July 2006 did not meet the criteria endorsed by the House Committee on 26 January 2009 (p16E[7]); and that Lord Paul did not make his designation and claims for night subsistence away from that property and for the mileage allowance in good faith. We recommend that, despite Lord Paul's swift repayment of the whole amount wrongly claimed (£41,982), the House sanction Lord Paul by requiring him to make a personal statement of apology to the House and thereafter suspending him from the service of the House for six months.

The allegation, complaint and process of investigation

Allegation and complaint

3. On 11 October 2009, the Sunday Times newspaper alleged that Lord Paul had designated as his main residence a flat in which he had never spent the night (p38):

    "A multi-millionaire ally of Gordon Brown pretended that a small flat occupied by one of his employees was his main home so he could claim £38,000 in expenses from the Lords. Lord Paul, one of Labour's biggest donors and a friend of the prime minister, has admitted he never even slept in the flat, despite stating it was his main residence. The one-bedroom flat was occupied by a manager from one of Paul's hotels who confirmed last week that the peer had never lived there while claiming the expenses. Paul, who has a family fortune of £500m, was actually based in London, where he has lived for more than 40 years."

4. Mr Angus Robertson MP complained about Lord Paul's alleged conduct the same day (p39); and Lord Paul referred himself to the Clerk of the Parliaments for investigation on 12 October (p40B).

Procedure for investigation of allegations about expenses

5. The House Committee is the principal domestic committee of the House and is responsible for the members' reimbursement scheme (p5B). On 20 October 2009, the Committee endorsed a procedure for dealing with complaints relating to the scheme (p15H). It involved investigation by the Clerk of the Parliaments as Accounting Officer; reference to the Sub-Committee in "complex or serious"[8] cases; report by the Clerk of the Parliaments to the House Committee; and sanctioning by the Committee for Privileges if appropriate (p16B). On 6 July 2010, the Clerk of the Parliaments and House Committee agreed to stand aside in this and two other cases where this Sub-Committee had been involved: thus this report goes via the Clerk of the Parliaments to the Committee for Privileges and Conduct, to whom lies Lord Paul's right of appeal[9].

Procedure in this investigation

6. After 11 October 2009, Lord Paul met and corresponded with the Clerk of the Parliaments, correspondence which concluded with his repaying £41,982 to the House (p41D[10]).The Metropolitan Police had meanwhile decided to investigate whether Lord Paul had committed an offence under section 17 of the Theft Act 1968 or the Fraud Act 2006. The Clerk of the Parliaments suspended his own investigation into Lord Paul until the criminal process had concluded. On 3 March 2010 a joint Crown Prosecution Service / Metropolitan Police Service panel decided not to prosecute Lord Paul and the Clerk of the Parliaments resumed his own investigation. On 5 March 2010, he asked the Sub-Committee "to investigate and determine the facts of the case" (p41E).

Investigation by the Sub-Committee

7. The report on procedure says that we may not accept for investigation a complaint going back more than four years[11]: we may thus examine conduct in this case from 11 October 2005. We have not limited our investigation to the allegation made by the Sunday Times newspaper but have instead generally investigated Lord Paul's use of the members' reimbursement scheme. We have focused on Lord Paul's claims for night subsistence and travel. Lord Paul's claims for day subsistence, office costs, and Select Committee expenses are not at issue.

8. Our investigation was interrupted by the dissolution of Parliament on 12 April 2010. The new House met on 18 May and appointed the Committee for Privileges and Conduct on 2 June. The Committee appointed this Sub-Committee on 7 June. We reported to the Clerk of the Parliaments on 28 July with the recommendation that, to retain confidentiality during the summer recess without affecting the timetable for any appeal, he should forward the report to the Chairman of the Committee for Privileges and Conduct only towards the end of the summer recess.

Evidence

9. The Sub-Committee had as written evidence the amounts claimed by Lord Paul since April 2003[12] (p24) and his claim forms since March 2006[13] (pp29-37); correspondence between the House authorities and Lord Paul (pp40-4); a letter from the Sunday Times and transcripts[14] of telephone conversations and interviews on which their article was based (pp45F-56); and witness statements taken by the Metropolitan Police Service in the course of their investigation of Lord Paul (pp58-93). We welcome the constructive approach of the police in taking the difficult decision to release to us the material they gathered. The officers of the Sub-Committee corresponded with Lord Paul. We took oral evidence in private from Lord Paul (pp94-105), to whom we had earlier disclosed the written evidence. The report on procedure says[15]:

    "Procedural safeguards

    25. The Code of Conduct states that "in the investigation and adjudication of complaints against them, Members of the House have the right to safeguards as rigorous as those applied in the courts and professional disciplinary bodies." They may be accompanied to any meeting by a colleague, friend or legal adviser, but every effort is made to keep proceedings informal, and there is no expectation that they should be so accompanied. If they do choose to bring a friend or adviser, they will nevertheless be expected to answer for themselves (and not through their friend or adviser) any questions put to them."

10. Lord Paul co-operated fully with the investigation. He brought with him to the evidence session his secretary, Ms Elizabeth Allan.

11. We recommend that all of this evidence be published, subject only to giving the police sufficient time to allow them to inform those from whom they took statements.

The facts

12. The report on procedure says[16]:

    "Assessing the evidence

    26. When its investigation is concluded, the Sub-Committee assesses the evidence. In order to find against a Member, the Sub-Committee requires at least that the allegation is proved on the balance of probabilities.

    27. If the investigation has uncovered material evidence that is at variance with the Member's version of events, this will be put to the Member, who will have a chance to challenge it. Before reaching its conclusions, the Sub-Committee will also share with the Member a draft of those parts of its report dealing with issues of fact, so that the Member has an opportunity to comment on them.

    28. If there remain significant contested issues of fact, the Sub-Committee will agree its own account of the facts of the case, while drawing to the attention of the Committee for Privileges and the House any challenge to this account made by the Member concerned."

13. To fulfil these paragraphs, we showed Lord Paul a draft of our account of the facts set out in paragraphs 14 to 37 below. He accepted the account of the facts but made a further point to which we draw attention (p106).

14. The facts of the case are as follows.

The members' reimbursement scheme

15. The members' reimbursement scheme is founded on resolutions of the House and is explained in a General Guide published by the Finance Department and in a Quick Guide set out on the reverse of the claim form. The Clerk of the Parliaments is responsible for administering the scheme, subject to direction by the House Committee on points of difficulty or doubt (p5B). The relevant resolutions and guidance are set out in full at pp1-15 of the printed evidence but we must here quote some relevant passages.

The resolutions of the House and published guidance

16. The principal resolution of the House in relation to day and night subsistence is that of 25 July 1991 (p1D). It reads:

    "(1) Members of this House, except any Lord who receives a salary under the Ministerial and other Salaries Act 1975 and the Chairman and Principal Deputy Chairman of Committees, shall be entitled to recover (in addition to the costs of travel for which other provision is made) expenses certified by them as—

    (a) expenses incurred (otherwise than as mentioned in sub-paragraph (b) below) for the purpose of attendance at sittings of this House or of Committees of this House, or

    (b) expenses incurred in staying overnight away from their only or main residence where it is necessary to do so for that purpose."

17. The principle that a member may claim a separate allowance towards the recovery of the cost of travel by car for the purpose of parliamentary duties was established by a resolution of the House of 17 May 1961 (p1A). The current resolution relating to travel by car is that of 10 November 2004 (p2C). It reads:

    "That this House approves the following proposals with respect to payments of car, bicycle and motorcycle allowances to Lords for journeys which they have commenced on or after 10 November 2004—

    (1) The maximum allowance payable in respect of a journey by car, motorcycle or bicycle should be payable at the rate which is applicable to that kind of vehicle under subsection (2) of section 230 of the Income Tax (Earnings and Pensions) Act 2003, as amended from time to time.

    (2) For the purposes of paragraph (1), the reference in that subsection to "the first 10,000 miles" is to the total number of miles of travel by car by the Lord claiming the allowance, which is either—

    (a) undertaken for the purpose of attending this House for the purposes of his parliamentary duties, or

    (b) undertaken while on parliamentary duties within the United Kingdom."

18. It is clear from the resolutions that the purpose of the scheme is the recovery of expenses necessarily incurred in attending the House.

19. As to the guidance, the 2005 edition of the General Guide read (pp2-14):

    "1.2.1 Members of the House of Lords do not, in general, receive a salary in respect of their parliamentary duties. However, Members may be reimbursed actual expenses arising out of these duties, in accordance with the rules of the Members' Reimbursement Allowance Scheme. The Members' Reimbursement Allowance Scheme is governed by Resolutions of the House. Rules for the recovery of Members' expenses are administered by the Clerk of the Parliaments who also has limited discretion to deal with matters that arise on claims. Points of particular difficulty or doubt may be referred to the House Committee, which supervises the arrangements for the reimbursement of expenses ...

    1.3 Taxable status

    1.3.1 All amounts paid in settlement of claims as detailed in this guide represent reimbursement of actual expenses arising out of unpaid parliamentary duty, rather than income from employment. Consequently, they are not subject to income tax, and need not be included on a tax return ...

    4 ATTENDANCE AT SITTINGS AT WESTMINSTER

    4.1 General - Expenses Related to Attendance

    4.1.1 The basic principle underlying the scheme is that the entitlement to recover expenses arises only in respect of attendance at sittings of the House or its committees at Westminster …

    4.1.3 Members who wish to claim attendance expenses must complete and sign the attendance expenses claim form and forward it as soon as convenient after the end of each month, or period of claim, to the Members' Expenses Section. A Member's signature effectively certifies that the amount claimed has been spent for the purposes of parliamentary duties as set out above. Receipts are not required ...

    4.2 Travelling Expenses

    General

    4.2.1 Claims may be made only for journeys over five miles between a Member's main place of residence in the United Kingdom and Westminster. Claims for incidental travel costs (e.g. those arising from short distance journeys within a five mile radius of Westminster, tolls and car parking charges) are covered by the day subsistence allowance (4.5).

    4.2.2 Members seeking to receive travel costs must register their main place of residence with the Members' Expenses Section. Members with more than one main place of residence may register an alternative main residence with the Members' Expenses Section for the purpose of claiming travelling expenses. Registration is subject to the approval of the Clerk of the Parliaments ...

    4.2.4 Members may recover the cost of fares incurred by them for travel by any public railway, sea, and air or bus service, or the costs of journey made by private car ...

    Road

    4.2.8 Claims in respect of journeys by private car are payable at:

·  40p per mile up to 10,000 miles in the year ending 31 March; and

·  25p per mile for mileage in excess of 10,000 miles in the same year.

    No other claims in respect of motoring expenses are reimbursable under the travelling expenses heading. Incidental travel costs such as tolls, congestion charges and car-parking charges can be claimed against the daily limit of the day subsistence allowance (4.5).

    4.4 Night Subsistence

    4.4.1 Members whose main residence is outside Greater London may claim for expenses of overnight accommodation in London while away from their only or main residence. The maximum daily limit is £154.50.

    4.4.2 A Member whose main residence is outside Greater London and who maintains a residence in London for the purpose of attending sittings of the House may claim this allowance towards the cost of maintaining such a residence.

    4.4.3 Claims for night subsistence are only permissible in respect of nights actually spent in London either immediately preceding or following attendance at a sitting or meeting described in paragraph 4.1.1 above. For example, a Member who necessarily travels to London on a Sunday and attends sittings of the House on Monday, Tuesday, Wednesday and Thursday and then returns home on Friday or later may claim night subsistence for a maximum of 5 nights at up to a maximum of £154.50 per night (i.e. a maximum of £772.50 for the week). However, if the Member returned home on the Thursday evening, the maximum claim for night subsistence would be 4 nights at up to a maximum of £154.50 per night (i.e. a maximum of £618 for the week).

    4.4.4 Members who choose to travel home each night or whose main residence is within Greater London cannot claim the night subsistence allowance."

20. The General Guide was updated in January 2007, October 2008 and April 2009. The language used to describe the scheme was materially the same in each edition until 2009, which left out the word "allowance" in several places, including in the title of the guide[17] and in paragraph 4.4.2 in relation to night subsistence.

21. The claim form used until October 2008 read (p29):

    "I certify that during the month of ............ I have attended a sitting of the House or of a Committee of the House on the under-mentioned dates and claim reimbursement of:

    (a) Night subsistence incurred in such attendance or in respect of the maintenance of a London residence (other than a main residence) used for the purpose of attending the House (see note (i)) ...

    (d) Travelling Expenses (please ensure all travel dates are entered) (see note (v))"

Thereafter paragraph (d) read (p35F):

    "(d) Travelling Expenses see note (v)"

22. At the bottom of the form, the claimant has to print his name, sign, date the claim and enter his main place of residence.

23. Notes (i) and (v) refer to the Quick Guide printed on the reverse of the claim form which in 2005 read (pp14-15):

    "(i) Night Subsistence - Members whose main residence is outside Greater London may claim expenses, within a daily limit of £154.50 (from 1 August 2005 to 31 July 2006), for nights spent away from their only or main residence for the purpose of attending sittings of the House a) where they have incurred expenses of overnight accommodation in London or; b) as a contribution towards the costs of maintaining a London residence in connection with their parliamentary duties. Claims can only be made in respect of days of attendance ...

    (v) Travelling Expenses - These may be claimed for journeys between main place of residence in the United Kingdom and London by any public railway, sea, air or bus service. Claims in respect of journeys by private car are restricted to an allowance of 40p per mile up to 10,000 miles then 25p thereafter. Claims in respect of journeys undertaken by motorcycle are paid at the rate of 24p per mile and by bicycle at the rate of 20p per mile."

24. The rates changed over the period. In August 2006 paragraph (v) read:

    "(v) Travelling Expenses - Claims may be made only for journeys over five miles between a Member's main place of residence in the United Kingdom and Westminster by any public railway, sea, air or bus service. Claims in respect of journeys by private car are restricted to an allowance of 40p per mile up to 10,000 miles then 25p thereafter. Claims in respect of journeys undertaken by motorcycle are paid at the rate or 24p per mile and by bicycle at the rate of 20p per mile. Claims for incidental travel costs are covered by the day subsistence allowance (see section (ii))."

25. In August 2009 paragraph (i) had a sentence added to the end: "When claiming Night Subsistence dates of travel must be shown on the claim form." As did paragraph (v): "Members are required to provide receipts or vouchers when submitting claims for ticketed travel in excess of £50 per return journey (£25 per single journey)."

26. Although the Quick Guide says "Members are encouraged to contact the Finance Department, House of Lords for general assistance, or to discuss any particular points that arise from their claims", in practice the onus on interpreting the scheme has fallen on the individual member. Save for the Lord President (Lord Soames) speaking of the member's "usual residence"[18] when moving the motion which first set up the night subsistence regime in 1979, there was no guidance on the meaning of "main residence" other than the two words themselves until March 2010[19].

Lord Paul's designated main residences

27. Lord Paul successively designated two main residences in the period from 11 October 2005 to the end of the last Parliament on 12 April 2010. Until the end of July 2006, it was The Cottage, Bignell Park Hotel, Chesterton, Oxfordshire. Since October 2006 it has been The Grange, Beaconsfield, Buckinghamshire.

Facts relating to the Oxfordshire property

28. Lord Paul's company, Caparo Holdings, bought the Bignell Park Hotel, Chesterton, Oxfordshire in July 2001 (p40J). In January 2005, Lord Paul designated The Cottage, Bignell Park Hotel as his main residence (p40L). We may examine conduct back to 11 October 2005, four years before the complaint of 11 October 2009.

29. The House of Lords Finance Department has retained the amounts claimed each month by members under each head since 2003 but has retained claim forms only from March 2006; members' earlier claim forms have been disposed of in accordance with the department's disposal policy. Lord Paul's claims for the short period March to July 2006 show claims for night subsistence away from his designated main residence for every day's attendance at the House and the mileage allowance for journeys by car from and to the main residence every weekend when the House was sitting with the exception of 29-30 April 2006 (p24H). The amounts claimed indicate a similar pattern of claims since designation of the Oxfordshire property as his main residence in January 2005 (p24D), a position confirmed by Lord Paul (Q114). He claimed £39,447 in night subsistence and £2,535 in travel expenses throughout the period that the Oxfordshire property was his designated main residence (i.e. January 2005 to July 2006), a total of £41,982.

30. The Oxfordshire property is a one bedroom flat within the hotel, with a separate entrance (p73D) but without a separate postal address (p73E). It was occupied throughout the period by the manager of the hotel (p73J; p47D). Lord Paul was financially responsible for the hotel in so far as he owns the company which owns the hotel. The running costs, including utilities, were subsumed into those of the hotel (QQ111-12).

31. The manager of the hotel recalls Lord Paul visiting the hotel for board meetings (p47F); the assistant manager recalls him visiting 6-7 times a year for a day at a time (p73H). Lord Paul did not confirm how often he visited the hotel (Q76 et seq). We do not need to find how often Lord Paul visited the Oxfordshire property because he admits that he never spent a night at the property (Q35) or at the hotel (p73L; Q35). Nor did he stay overnight in the area (QQ101-3). This is despite claiming for journeys to the main residence usually on a Friday or Saturday and a return journey to London on a Sunday (pp25-8).

32. In relation to the journeys, Lord Paul admits that he did not make the journeys on the days stated on his claim forms (QQ36, 90-1; 171-2) though he says that he did travel to the hotel and/or surrounding area most weekends when the House was sitting (p44C; QQ37; 98-9). Indeed, he may have made more journeys than those for which he claimed, but he only claimed for one return journey a week (Q93).

33. Defending the designation, Lord Paul says that having bought the hotel in 2001 he wanted first to test whether he wished to live in the country or remain in London (Q79); then considered developing part of the hotel as a residence for his family, making use of the hotel amenities (p40K; QQ80-1; 145). Having decided in favour of the country but against such a development, he used the hotel as a base for looking for a country house closer to London (QQ83-4; 106).

34. He found the desired country house on 28 February 2005, namely The Grange, Beaconsfield, Buckinghamshire. He contracted to buy the Buckinghamshire property in March 2006; and designated it as his main residence in August 2006 (p41B). Having contracted to buy the Buckinghamshire property, he stopped house hunting but continued to travel to and from that property (not the Oxfordshire property) each weekend (QQ128-9; 166-7). The Buckinghamshire property is 30 miles closer to London than the Oxfordshire property. The Oxfordshire property remained his designated main residence and subject to claims for night subsistence and travel until August 2006.

Facts relating to the Buckinghamshire property

35. In August 2006, Lord Paul designated the Buckinghamshire property as his main residence and claimed night subsistence away from that main residence for his attendance at the House from when it resumed in October. His claim forms show claims for every day's attendance and the mileage allowance for journeys by car from and to the main residence every weekend when the House was sitting with the exception of 4-5 November 2006, 17-18 March 2007 and 2-3 November 2007. The property is a 250 acre estate in Buckinghamshire (p44E).

36. In correspondence with the Registrar, Lord Paul says that "I spend a lot of time at the Grange (almost every weekend) with my wife and family" (p44E). He owns the Buckinghamshire property personally and no one other than his family uses it. He says that he spent part of the Easter, Whitsun and summer recesses of 2007-09 at the property but cannot confirm the exact periods (p44F). As far as he can recall, he travelled as indicated by his claim forms and stayed overnight at the property.

Lord Paul's residence in London

37. When in London, Lord Paul lives in a flat in a block of flats on Portland Place in which he and his wife have lived since 1966 (Q11); he owns the building (Q15); other members of his family live in other of the flats (Q14) but about half of the flats are rented by private tenants (Q21). We have not asked and he has not volunteered what expense he incurs in maintaining that residence.

The issues

38. The case raises three issues: 1) whether Lord Paul's two designated main residences in the period under investigation meet the criteria endorsed by the House Committee for these investigations; 2) whether Lord Paul correctly claimed for travel from and to those main residences; and 3) if the facts identify one or more wrongly designated main residences, whether Lord Paul acted in good faith in making his designations and claims for night subsistence and travel.

Issue 1: whether Lord Paul's designated main residences in the period under investigation met the criteria endorsed by the House Committee

39. On 26 January 2010, the House Committee endorsed the Clerk of the Parliaments' approach to determining allegations about the members' reimbursement scheme, as recorded in the published extract of the minutes of that meeting (p16E):

    "He [the Clerk of the Parliaments] emphasised that he was operating under the current scheme, one of the weaknesses of which was that there was no clear definition of a main residence. He had however taken the view, within the context of the individual assessment of each case, that there needed to be a minimum threshold beyond which it would be inappropriate for a Member to designate a property as a main or only residence, and consequently claim overnight subsistence when staying in London.

    He sought the endorsement of the Committee of the criteria which he was incorporating into his assessment of cases where frequency of visits was an issue: i.e. that the main residence had to be visited for a minimum of one weekend per month over the year when the House was sitting and for periods during recesses. These factors would be taken into account, along with other evidence, when assessing the validity of the designation of a main residence. He drew the attention of the Committee to the fact that it was probable that more stringent requirements would be a feature of the new scheme for Members' expenses.

    He also raised the issue of whether a property that was occupied by a relative other than a spouse or partner could in any circumstances be designated as a main residence under the current scheme. It was felt that this could in very specific circumstances be appropriate, subject to the thresholds established and depending on the detail of the Member's connection with the property, including relevant financial responsibilities."

40. We consider the criteria endorsed by the House Committee to be binding on us: it is the principal domestic committee of the House and explicitly responsible for the members' reimbursement scheme (p5B).

41. "Visit" is used in the context of "weekend". We consider that "visit" must include an overnight stay. We also consider that "one weekend per month" is not a minimum threshold set by the House Committee, but the minimum frequency of occupation when the House was sitting subject to "other evidence": it is a necessary but not sufficient criterion.

42. The Committee for Privileges' and our own report on Lord Clarke of Hampstead's use of the members' reimbursement scheme, agreed to by the House on 6 April 2010, is also relevant[20]. In that report, we found that:

    "17. It is clear to us that a member may only claim under the scheme i) if they have stayed overnight away from their main residence; and ii) they have attended the House. There is no ambiguity about these conditions ...

    23. Our interpretation of the resolution, General Guide and Quick Guide taken together is that a member who maintained a residence in London for the purpose of attending the House could reasonably claim that the night subsistence provision was a flat rate allowance intended to reimburse the member for the costs of maintaining such a residence (General Guide paragraph 4.4.2). A member who did not maintain a residence in London was however entitled only to claim for the recovery of actual expenses (General Guide paragraph 4.4.1). The former is no longer the case as the word "allowance" was removed from the guidance in April 2009."

43. The report from the Committee for Privileges was agreed to by the House and is binding.

Recent cases

44. In the period since the House Committee endorsed the criteria for determining a main residence for the purpose of these investigations, the Clerk of the Parliaments has determined a number of complaints raising similar questions (pp17-23) and a further number of media allegations against members who were not subsequently complained about.

Opinion of the Sub-Committee

Oxfordshire

45. The fact that Lord Paul admits that he never stayed overnight at the Oxfordshire property is sufficient for us to find that his designation did not meet the criteria endorsed by the House Committee. Lord Paul wrongly designated the Oxfordshire property as his main residence.

46. With the assistance of the Finance Department, Lord Paul calculated that he claimed £39,447 in night subsistence in respect of nights away from the Oxfordshire property from January 2005 to July 2006. He has voluntarily repaid this sum to the House. This is a greater sum than the House could have required him to repay, as we may only investigate the four years of conduct back to 11 October 2005.

Buckinghamshire

47. The Buckinghamshire property is a home owned by Lord Paul and regularly used by Lord Paul and his wife when the House was sitting and in the recess. Lord Paul's designation meets the criteria endorsed by the House Committee.

London

48. In terms of the amount of night subsistence claimed by Lord Paul for his accommodation in London, our report on Lord Clarke of Hampstead (agreed to by the House on 6 April 2010) made clear that the scheme provided a flat rate allowance intended to reimburse the member for the costs of maintaining a residence in London until April 2009 when the word "allowance" was removed from the guidance (General Guide paragraph 4.4.2); since then it has been a reimbursement scheme. Lord Paul legitimately claimed the full amount of available night subsistence as an allowance when away from the Buckinghamshire property until 6 April 2010. Since that date, Lord Paul should only have claimed reimbursement of the actual cost of maintaining his London residence. Lord Paul claimed the full amount of night subsistence in April 2010 but has not yet submitted a claim in the new Parliament.

Issue 2: whether Lord Paul should have claimed for travel from and to his main residence

Oxfordshire

49. Lord Paul should not have designated the Oxfordshire property as his main residence. Claims for travel may only be made for journeys made between a main residence and Westminster in respect of parliamentary duties (pp6K; 15B). As the Oxfordshire property was not his main residence, Lord Paul was not eligible to claim for travel from and to Oxfordshire. We do not need to find whether he made the journeys for which he claimed, though he admits that he did not make them either from or to his designated main residence or on the dates for which he claimed.

50. Lord Paul calculated that he had claimed £2,535 under the mileage allowance for journeys by car from and to Oxfordshire from January 2005 to July 2006[21] and he has voluntarily repaid this sum to the House. Again, this is a greater sum than the House could have required him to repay, as we may only investigate the four years of conduct back to 11 October 2005.

Buckinghamshire

51. Lord Paul confirmed that he travelled from and to the Buckinghamshire property as indicated by his claims for the mileage allowance for journeys by car (p44F). He was entitled to make those claims.

Issue 3: if the facts identify one or more wrongly designated main residences, whether Lord Paul acted in good faith in making his designation and claims

52. Having found that Lord Paul wrongly designated the Oxfordshire property as his main residence and that he made claims for night subsistence and travel to which he was not entitled, we now turn to the issue of good faith. If Lord Paul did not act in good faith when making his designation and claims for night subsistence and travel, then he is liable to sanction. If however Lord Paul had good reason to believe that his designation and claims were valid, sanction might be inappropriate.

53. In correspondence with the Clerk of the Parliaments, Lord Paul says (p41B):

    "I recognise that claiming during the Bignall interlude has been perceived as having been on the wrong side of the line. I acted on entire good faith throughout."

Understanding of the scheme, designations and claims for night subsistence

54. In testing Lord Paul's good faith, we are not assessing his conduct against the criteria endorsed by the House Committee but against any natural understanding of the scheme and "main residence" that might be held by a reasonable person. This is because the criteria endorsed by the House Committee were not designed retrospectively to define "main residence" for the purpose of the scheme but were designed only as criteria to be applied to the retrospective examination of certain members' claims.

55. Lord Paul makes his assertion of good faith on the basis of his understanding of the rules. In relation to "main residence", Lord Paul says (p43L):

    "At the time there was no definition of "main" or "principle" [sic] residence and it was my understanding (which prevailed in the House from 2004 to 2009) that if one owned a second home outside of London a claim could be made for overnight subsistence in London when the House was sitting and also for travel to and from the second home. I accept now, that due to the lack of guidance at the time, my understanding may have been mistaken."

In Lord Paul's account, it was ownership not residence that was essential (QQ 61 to 65; 69; 147); indeed there was no need to reside (Q155). The word "main" in "only or main residence" had no effect on the definition (Q161).

56. Such a misconception might still be justified if Lord Paul had studied the guidance and come to such a conclusion, but he had not. He never read the Quick Guide on the reverse of the claim form, telling us that he often signed forms without reading the detail (Q141). He did not consider his obligation when he himself completed his claim form each month (Q113) and signed his name above the address he had filled in as his "main place of residence" (Q153). Nor did he seek anything other than very general advice from colleagues (QQ70; 107-10; 143). He did not even read the rules when certain of his claims were rejected (QQ148-9). We find this attitude to the making of a claim upon public funds to be inexcusable.

57. Even if Lord Paul's definition of "residence" were reasonable, his lack of regard to "main" is unreasonable. We consider that no reasonable person could hold Lord Paul's understanding of "main residence" in relation to the scheme.

58. We find that Lord Paul's designation of the Oxfordshire property was a deliberate misrepresentation of his domestic arrangements made with the intention of enabling Lord Paul to make use of the night subsistence element of the members' reimbursement scheme.

Claims for the mileage allowance for journeys by car

59. In relation to travel, Lord Paul suggested that he was entitled to the mileage allowance for a return journey from and to his main residence irrespective of whether he had made the journey (QQ91-3). The wording of the Quick Guide is clear: "Members of the House of Lords... are entitled to recover the costs of travel... incurred in connection with their parliamentary duties... Travelling Expenses - These may be claimed for journeys between main place of residence in the United Kingdom and London" (p15B). The members' reimbursement scheme did not exist to subsidise Lord Paul's weekend house-hunting (Q106) but to facilitate his attendance in the House if that involved him being away from his main residence. We consider that no reasonable person could believe that the scheme enabled a member to claim for journeys he did not make and for purposes unconnected with attendance at the House.

60. On the balance of probabilities, we consider that Lord Paul did not truly hold the understanding of the provision for the mileage allowance for journeys by car with which he presented us. Not only could no reasonable person hold such an understanding, but the fact that he claimed for journeys to the main residence usually on a Friday or Saturday and a return journey to London on a Sunday, when he admits that (a) the journeys were not made on the days stated; and (b) he never stayed overnight in the Oxfordshire property, the hotel or in the surrounding area, indicates to us that Lord Paul made the claims for the mileage allowance for journeys by car from and to the Oxfordshire property with the intention of adding verisimilitude to his designation of that property as his main residence.

Conclusion

61. We find that Lord Paul did not act in good faith in designating the Oxfordshire property as his main residence and in claiming night subsistence and travel expenses from and to that property.

Sanction

62. We are conscious that this case is similar to that of Lord Clarke of Hampstead (in which an apology was sufficient) in that both members deliberately made false claims over a sustained period of time; referred their own conduct for investigation; quickly repaid the wrongly-claimed money; cooperated with the investigation; and apologised. Lord Paul's case is however different from that of Lord Clarke. Lord Clarke wrongly claimed for 61 days' night subsistence when he had in fact returned to his main residence, but his (only) residence was genuinely in Hertfordshire. Lord Paul's wrong is greater in scale: he did not have a main residence outside London; none of his claims for night subsistence away from that residence was valid; he did not make the journeys for which he claimed on the days claimed; and the quantum wrongly claimed is greater. In addition, despite his apology to the Sub-Committee, Lord Paul has continued to present his case as a reasonable interpretation of the scheme honestly held. It was not. Not only did he make false claims but he presented the Sub-Committee with an understanding of the scheme which no reasonable person could hold in an attempt to disguise the deliberate nature of his deception.

63. We recommend that the House sanction Lord Paul by requiring him to make a personal statement of apology to the House and thereafter suspending him from the service of the House for six months. His apology must be unconditional, and agreed in advance with the Chairman of the Sub-Committee, to be sufficient.



5   The Code of Conduct: procedure for considering complaints against Members, 4th Report from the Committee for Privileges, session 2007-08, HL Paper 205, paragraph 11 bullet 2. Report agreed to by the House on 18 December 2008. Hereafter referred to as "the report on procedure". Back

6   In the last Parliament, the Sub-Committee was styled the Sub-Committee on Lords' Interests; it is now styled the Sub-Committee on Lords' Conduct. Back

7   The references in this report to the printed evidence are in the form "p16E" and "Q114". The former refers to page 16 of the printed evidence at letter E; the latter to question number 114 in the transcript of oral evidence. Back

8   Report on procedure, paragraph 11 bullet 2: "Matters relating to the Members' Reimbursement Allowance Scheme are the responsibility of the Clerk of the Parliaments, as Accounting Officer for the House of Lords. In exceptional circumstances he may request the Sub-Committee to assist him in investigating a complex or serious complaint".  Back

9   House of Lords Code of Conduct, 2 July 2001, paragraph 19(e): "If after the investigation the Sub-Committee finds the allegation proved, the Member complained against has a right of appeal to the Committee for Privileges"; the report on procedure paragraphs 32-37 sets out the appeal procedure.  Back

10   The Clerk of the Parliaments' letter to Lord Paul of 23 October 2009 refers only to the repayment of night subsistence. Lord Paul then volunteered a further payment of £2,535 for the repayment of travel expenses; the amount calculated by him and confirmed by the Finance Department. We have no correspondence relating to this latter payment though the Finance Department assures us that the full amount has been paid. Back

11   Report on procedure, paragraph 11 bullet 4. Back

12   Printed in evidence are the amounts from January 2005, when Lord Paul first designated a property outside London as his main residence. Back

13   The House of Lords Finance Department has retained the amounts claimed each month by members under each head since 2003 but has retained claim forms only from March 2006; all members' earlier claim forms have been disposed of in accordance with the department's disposal policy. Back

14   The Sunday Times also supplied the Committee with the recordings on which their transcripts were based. We did not rely on the newspaper's transcripts but commissioned our own. Those published as evidence were either corrected or created by the clerks. Back

15   Report on procedure, paragraph 25. Back

16   Report on procedure, paragraphs 26 to 28.  Back

17   Until April 2009, the guide was entitled "Members' reimbursement allowance scheme general guide". Back

18   HL Deb 26 July 1979 col 1135-37. Back

19   Financial Support for Members of the House: Declaration of Principal Residence and Publication, 3rd Report from the House Committee, session 2009-10, HL Paper 89. Report agreed to by the House on 22 March 2010. Back

20   The conduct of Lord Clarke of Hampstead, 4th Report from the Committee for Privileges, session 2009-10, HL Paper 112. Back

21   The Finance Department confirmed his calculation. Back


 
previous page contents

House of Lords home page Parliament home page House of Commons home page search page enquiries index

© Parliamentary copyright 2010